5 ms·

The Scarcest Resource at Startups is Management Bandwidth

140 points by DanielRibeiro 15y ago

paulsutter 15y ago
Superb article, I would up vote this 5 times if I could
elviejo 15y ago
Dr. Goldratt wrote in his later works that the "biggest constraint is Management Attention". So it is crucial when you are constrained by cash, time, people, etc. to keep your focus.
officemonkey 15y ago
The book "Good to Great" sums this up amazingly well as something called "the Hedgehog Concept." * What are you deeply passionate about? * What can you be the best in the world at? * What drives your economic engine? If there is something that does not fit in those three circles, do not do that thing. Much of the entrepreneur blogosphere would go up in a puff of smoke if people would simply read the business books that stand the test of time.
- ryanmolden 15y ago
  http://www.freakonomics.com/2008/07/28/from-good-to-great-to-below-average/ http://www.freakonomics.com/2008/07/28/from-good-to-great-to...
  - _pius 15y ago
    That article is little more than FUD and neither refutes the Hedgehog concept nor adds much value to the current discussion.
    - larrys 15y ago
      How do you feel that putting a link to the Freakanomics article doesn't provide perspective on this statement: "Much of the entrepreneur blogosphere would go up in a puff of smoke if people would simply read the business books that stand the test of time." I think it does and is appropriate. I've been around long enough to have read "In search of Excellence" which Levitt refers to this way "These business books are mostly backward-looking". What the books that are backward looking don't reveal is the companies that follow the same practices that have failed. There is never any data on that.
      - _pius 15y ago
        How do you feel that putting a link to the Freakanomics article doesn't provide perspective on this statement: "Much of the entrepreneur blogosphere would go up in a puff of smoke if people would simply read the business books that stand the test of time." I think it does and is appropriate. I don't think it does. The problem of business books being mostly backward-looking is interesting, but completely orthogonal to the question of whether many lessons written about in blog posts have already been covered by classic business books.
    - ryanmolden 15y ago
      So to be clear, a man writes a book purporting to identify the characteristics and behaviors that make companies great. He calls out some number of such great companies and shows how they all fit into his analysis. Said companies go on to do objectively less than great, and someone calling that out is engaging in FUD? Interesting. In my opinion Jim Collins has made a career on identifying success in hindsight, plunging headlong into a classic case of survivorship bias in order to divine the root causes of these successes, and then publishing his analysis. Can you point me to anything he has written that is predictive instead of simply retrospective? Can you actually claim that there aren't likely to be hundreds of businesses that exhibit all the traits that make businesses 'great' and yet failed?
      - _pius 15y ago
        So to be clear, a man writes a book purporting to identify the characteristics and behaviors that make companies great. He calls out some number of such great companies and shows how they all fit into his analysis. Said companies go on to do objectively less than great, and someone calling that out is engaging in FUD? Interesting. Nothing in the article actually shows that the Hedgehog concept is bad or wasn't a factor in these companies' past success. It's little more than a glib, cocktail party-sized nugget of contrarianism with no real substance. That's why I dismissed it as FUD. In my opinion Jim Collins has made a career on identifying success in hindsight, plunging headlong into a classic case of survivorship bias in order to divine the root causes of these successes, and then publishing his analysis. Can you point me to anything he has written that is predictive instead of simply retrospective? That's the whole point: it's not predictive, it's retrospective. I said the article you linked to is FUD not because I'm a Jim Collins or business book industry apologist, but because the article attacks a strawman, namely that the book claimed that companies' past success implies that they will always be successful. It'd be great if one could prove business success by induction, but it doesn't work that way. This article doesn't even attempt to address whether or not the failed companies it mentioned continued to use the concept described in the book.
  - officemonkey 15y ago
    Companies change. CEOs leave. For example, the thing that made Fannie Mae succeed (being able to manage risk) was abandoned with the loosening of the credit markets in 1999 and beyond. Discipline is hard and success in the past gives you a false feeling of security. Interestingly enough, this is covered in the book, but a dismissive blogosphere article isn't going to admit that.
    - ryanmolden 15y ago
      Sure, but have you analysed these cases to see that is what happened or are you just saying that happened because they went on to do poorly? People have, for ages, been purporting to identify the secrets to success and sell you something that will allow you to predict the future/replicate the winners, and yet it is still rare. You could claim it is because it is hard and success breeds hubris, both of which are likely to be true, but it could also be because Jim Collins, like others before him, has not stumbled upon the secret to being great and found a way to distill it into a book or a simplistic maxim that actually works.
      - officemonkey 15y ago
        The research in the book says that Fannie Mae succeeded because they learned to manage risk better than any other company. Years of leadership by David O. Maxwell and James A. Johnson ended in 1998, and provisions of Glass-Steagall was repealed in 1999. There is no simplistic maxim, but the concepts and success described in the book are backed up with far more research than either blogosphere article cited.
- larrys 15y ago
  "What can you be the best in the world at? " Ridiculous and idealistic. Is Porsche the best sports car or the best selling sports car? Is Avis the best car rental company and on what metric? Is Burger King the best fast food? What is the definition of best? Best selling? Most profitable? Highest quality?
  - bmelton 15y ago
    If nobody tried to be the best, there wouldn't be anything good. Porsche may not be "the best" sports car overall as that is a very subjective metric. Though for sure, they make an exceptional car. For various definitions of 'reasonable', the 911 is the most performant car in at its price point (or at least, generally is, these things wax and wane). The key isn't whether they are the best sports car, but whether or not they're succeeding at being the best at ... something. That something may not be as broad as 'best sports car', but may be much more narrow. Twitter isn't "the best website" in the world, but it might be the best way to transmit short messages to a broad list of friends. Similarly, Dropbox might do very poorly in a "best system backup" utility, but might win competitions involving ease of use, or in being convenient enough that its users actually bother (which is better than most backup providers.) The companies that try to be all things to all people are few and far between, and us, as entrepreneurs, are thankful for them because all it means is we have to beat them in one small segment and they acquire us. ;-)
  - officemonkey 15y ago
    That's covered in the book as well. You get to pick the thing you're best at. From my own experience, Hertz has decided to concentrate on the metric "Getting regular customers into a car as quickly as possible." I recently went to Enterprise and I was appalled by the difference in customer service. They were nice, and the car was fine, but nobody _wants_ to spend 15 minutes waiting in line for a car. As far as car makers, there are many metrics as well. You could go with "per car profitability," or you could go with "lowest cost per car," or you could go with "best customer retention." The thing is, once you decide _which_ best car maker you're going to be. Once you decide, you become ruthless in pursuing it.
donw 15y ago
Focus is the most important thing you can have as a startup founder. Every failed company that I have founded, worked at, worked with, or heard of, has ultimately failed because they could not focus on a single goal, and instead pursued multiple, divergent plans... all at the same time. Not 'some failed companies', or even 'many failed companies'. Every company that I have seen fail, has failed because they could not focus. It's amazing how easy it is to be distracted, as well. Lots of shiny new opportunities to expand. There's new features that will give you a share of some marginally-related market, or new alliances that will only cost 'a little engineering time'. It's amazing how expensive those 'little' things really end up being.
- pgsoldyoualie 15y ago
  So you're approximately 12 and like to lie on the internet?
- SoftwareMaven 15y ago
  Yes, but too single-minded of a focus can lead to opportunity blindness. Daily pivots are bad. Never pivoting is bad. Building a successful startup is highly nuanced.
  - deleted 15y ago
    [deleted]
  - rwallace 15y ago
    Doesn't pivot usually mean "our original plan X doesn't work, let's ditch it and do Y _instead_"? That's a different thing from what the article is talking about, "our plan is still X, but let's do Y _at the same time_, it won't cost that much".
- wpietri 15y ago
  For what it's worth, I've seen plenty of failures of other sorts. One of the most common is the "field of dreams" failure mode, where you focus on building your vision, rather than on understanding your customers and building what they actually need in a sustainable fashion. The canonical example is Webvan: http://en.wikipedia.org/wiki/Webvan http://en.wikipedia.org/wiki/Webvan They were focused to a fault.
SatvikBeri 15y ago
I would frame the same idea in a different way: the scarcest currency is thought. Willpower is finite. There are a very small number of things you can spend effective mental energy on-you can't work at optimal intelligence 12 hours a day (or even 8 hours a day). Furthermore, I've noticed this trend where spending twice the amount of effective, focused work on X usually results in more than twice the benefits. This means that you have to pick what even enters your attention very carefully. So ask yourself: what do I spend most of my time thinking about? And what should I be spending my precious thought on?
ojbyrne 15y ago
Rather than Jim Collins, I'd vote for Michael Porter as the management guru to read. His idea of generic strategies is a great way to deal with this. Essentially he says there are 3 generic strategies - cost leadership, differentiation, and focus (market segmentation), and that you need to pick one and follow it 100%. Doing that really can focus the company on what needs to be done now and what is irrelevant to your success. http://en.wikipedia.org/wiki/Porter_generic_strategies http://en.wikipedia.org/wiki/Porter_generic_strategies
jmitcheson 15y ago
Out of all the CEOs I've been around, the one I viewed as the most successful would always tell me "If you try to do too many things at once, you end up doing justice to none of them at all".
robatsu 15y ago
The thing that I dislike the most about the technology business is people who want to use developers as crash test dummies for their random ideas and think that "good ideas" are the topmost measure of goodness and once having a good idea, all the rest will naturally unfold. Pivots are good and oftentimes necessary, but I learned years ago that good ideas are a dime a dozen. The ability of an organization to competently execute on a (seemingly) good idea is the much rarer skill, 1% inspiration/99% perspiration and all that. The OP seems to think this is something that can be managed. I do believe that, but I'm not sure it is something that can be as easily quantified & then learned as a generic management skill as the OP seems to imply.
devenson 15y ago
Correlation does not imply causation. A "startup" is a company in search of a successful business model. Those that fail will leave behind a record of many failed explorations, making it look as thought this was the "cause" of their failure. Perhaps they just failed to find their successful business model. Perhaps it was never there. That said, I do agree with the author. Focus is key.
- wpietri 15y ago
  There's an important difference, though. At my startup we've tried a lot of things, but we try them serially. We went through a bunch of ideas early on, doing our best to kill the idea in prototype. Here my co-founder talks about how we spent 6 weeks to kill an idea that other people spent 9 months (and millions of dollars) to kill: http://vimeo.com/24749599 http://vimeo.com/24749599 The failure mode that Suster talks about is trying to do all the ideas in parallel. I agree that startups should try a lot of things, but strongly believe they should focus on one at a time.
deleted 15y ago
[deleted]
jrkelly 15y ago
100% right on focus, but this part is grating: "But as you know, a few key people in any business have disproportionate impact on the company’s ultimate success. And nobody is more important in this regard than senior management." You see recommendations for this management style throughout Mark's blog posts. IMO, he is advocating a style that is more centralized than is effective in the uncertain environment of a startup. Strong central control works great when you are executing on a clear business model. Prior to that, you want empowered employees who have a shared view of the current business model hypothesis and are confident enough to question it.
- xanados 15y ago
  Keep in mind that his advice is targeted at companies at the stage in which he is most active, those seeking or having completed Series A/B venture capital financings. By the time a company has reached this stage it has much more centralized control than a pure pre-seed or angel startup.
fellars 15y ago
Any suggestions on how to maintain focus, while still allowing team members flexibility on what they work on? It seems to be a very fine line I have struggled with in the past.

140 points by DanielRibeiro 15y ago

Superb article, I would up vote this 5 times if I could

Dr. Goldratt wrote in his later works that the "biggest constraint is Management Attention". So it is crucial when you are constrained by cash, time, people, etc. to keep your focus.

officemonkey 15y ago

The book "Good to Great" sums this up amazingly well as something called "the Hedgehog Concept." * What are you deeply passionate about? * What can you be the best in the world at? * What drives your economic engine? If there is something that does not fit in those three circles, do not do that thing. Much of the entrepreneur blogosphere would go up in a puff of smoke if people would simply read the business books that stand the test of time.

ryanmolden 15y ago
http://www.freakonomics.com/2008/07/28/from-good-to-great-to-below-average/ http://www.freakonomics.com/2008/07/28/from-good-to-great-to...
- _pius 15y ago
  That article is little more than FUD and neither refutes the Hedgehog concept nor adds much value to the current discussion.
  - larrys 15y ago
    How do you feel that putting a link to the Freakanomics article doesn't provide perspective on this statement: "Much of the entrepreneur blogosphere would go up in a puff of smoke if people would simply read the business books that stand the test of time." I think it does and is appropriate. I've been around long enough to have read "In search of Excellence" which Levitt refers to this way "These business books are mostly backward-looking". What the books that are backward looking don't reveal is the companies that follow the same practices that have failed. There is never any data on that.
    - _pius 15y ago
      How do you feel that putting a link to the Freakanomics article doesn't provide perspective on this statement: "Much of the entrepreneur blogosphere would go up in a puff of smoke if people would simply read the business books that stand the test of time." I think it does and is appropriate. I don't think it does. The problem of business books being mostly backward-looking is interesting, but completely orthogonal to the question of whether many lessons written about in blog posts have already been covered by classic business books.
  - ryanmolden 15y ago
    So to be clear, a man writes a book purporting to identify the characteristics and behaviors that make companies great. He calls out some number of such great companies and shows how they all fit into his analysis. Said companies go on to do objectively less than great, and someone calling that out is engaging in FUD? Interesting. In my opinion Jim Collins has made a career on identifying success in hindsight, plunging headlong into a classic case of survivorship bias in order to divine the root causes of these successes, and then publishing his analysis. Can you point me to anything he has written that is predictive instead of simply retrospective? Can you actually claim that there aren't likely to be hundreds of businesses that exhibit all the traits that make businesses 'great' and yet failed?
    - _pius 15y ago
      So to be clear, a man writes a book purporting to identify the characteristics and behaviors that make companies great. He calls out some number of such great companies and shows how they all fit into his analysis. Said companies go on to do objectively less than great, and someone calling that out is engaging in FUD? Interesting. Nothing in the article actually shows that the Hedgehog concept is bad or wasn't a factor in these companies' past success. It's little more than a glib, cocktail party-sized nugget of contrarianism with no real substance. That's why I dismissed it as FUD. In my opinion Jim Collins has made a career on identifying success in hindsight, plunging headlong into a classic case of survivorship bias in order to divine the root causes of these successes, and then publishing his analysis. Can you point me to anything he has written that is predictive instead of simply retrospective? That's the whole point: it's not predictive, it's retrospective. I said the article you linked to is FUD not because I'm a Jim Collins or business book industry apologist, but because the article attacks a strawman, namely that the book claimed that companies' past success implies that they will always be successful. It'd be great if one could prove business success by induction, but it doesn't work that way. This article doesn't even attempt to address whether or not the failed companies it mentioned continued to use the concept described in the book.
- officemonkey 15y ago
  Companies change. CEOs leave. For example, the thing that made Fannie Mae succeed (being able to manage risk) was abandoned with the loosening of the credit markets in 1999 and beyond. Discipline is hard and success in the past gives you a false feeling of security. Interestingly enough, this is covered in the book, but a dismissive blogosphere article isn't going to admit that.
  - ryanmolden 15y ago
    Sure, but have you analysed these cases to see that is what happened or are you just saying that happened because they went on to do poorly? People have, for ages, been purporting to identify the secrets to success and sell you something that will allow you to predict the future/replicate the winners, and yet it is still rare. You could claim it is because it is hard and success breeds hubris, both of which are likely to be true, but it could also be because Jim Collins, like others before him, has not stumbled upon the secret to being great and found a way to distill it into a book or a simplistic maxim that actually works.
    - officemonkey 15y ago
      The research in the book says that Fannie Mae succeeded because they learned to manage risk better than any other company. Years of leadership by David O. Maxwell and James A. Johnson ended in 1998, and provisions of Glass-Steagall was repealed in 1999. There is no simplistic maxim, but the concepts and success described in the book are backed up with far more research than either blogosphere article cited.
larrys 15y ago
"What can you be the best in the world at? " Ridiculous and idealistic. Is Porsche the best sports car or the best selling sports car? Is Avis the best car rental company and on what metric? Is Burger King the best fast food? What is the definition of best? Best selling? Most profitable? Highest quality?
- bmelton 15y ago
  If nobody tried to be the best, there wouldn't be anything good. Porsche may not be "the best" sports car overall as that is a very subjective metric. Though for sure, they make an exceptional car. For various definitions of 'reasonable', the 911 is the most performant car in at its price point (or at least, generally is, these things wax and wane). The key isn't whether they are the best sports car, but whether or not they're succeeding at being the best at ... something. That something may not be as broad as 'best sports car', but may be much more narrow. Twitter isn't "the best website" in the world, but it might be the best way to transmit short messages to a broad list of friends. Similarly, Dropbox might do very poorly in a "best system backup" utility, but might win competitions involving ease of use, or in being convenient enough that its users actually bother (which is better than most backup providers.) The companies that try to be all things to all people are few and far between, and us, as entrepreneurs, are thankful for them because all it means is we have to beat them in one small segment and they acquire us. ;-)
- officemonkey 15y ago
  That's covered in the book as well. You get to pick the thing you're best at. From my own experience, Hertz has decided to concentrate on the metric "Getting regular customers into a car as quickly as possible." I recently went to Enterprise and I was appalled by the difference in customer service. They were nice, and the car was fine, but nobody _wants_ to spend 15 minutes waiting in line for a car. As far as car makers, there are many metrics as well. You could go with "per car profitability," or you could go with "lowest cost per car," or you could go with "best customer retention." The thing is, once you decide _which_ best car maker you're going to be. Once you decide, you become ruthless in pursuing it.

donw 15y ago

Focus is the most important thing you can have as a startup founder. Every failed company that I have founded, worked at, worked with, or heard of, has ultimately failed because they could not focus on a single goal, and instead pursued multiple, divergent plans... all at the same time. Not 'some failed companies', or even 'many failed companies'. Every company that I have seen fail, has failed because they could not focus. It's amazing how easy it is to be distracted, as well. Lots of shiny new opportunities to expand. There's new features that will give you a share of some marginally-related market, or new alliances that will only cost 'a little engineering time'. It's amazing how expensive those 'little' things really end up being.

pgsoldyoualie 15y ago
So you're approximately 12 and like to lie on the internet?
SoftwareMaven 15y ago
Yes, but too single-minded of a focus can lead to opportunity blindness. Daily pivots are bad. Never pivoting is bad. Building a successful startup is highly nuanced.
- deleted 15y ago
  [deleted]
- rwallace 15y ago
  Doesn't pivot usually mean "our original plan X doesn't work, let's ditch it and do Y _instead_"? That's a different thing from what the article is talking about, "our plan is still X, but let's do Y _at the same time_, it won't cost that much".
wpietri 15y ago
For what it's worth, I've seen plenty of failures of other sorts. One of the most common is the "field of dreams" failure mode, where you focus on building your vision, rather than on understanding your customers and building what they actually need in a sustainable fashion. The canonical example is Webvan: http://en.wikipedia.org/wiki/Webvan http://en.wikipedia.org/wiki/Webvan They were focused to a fault.

SatvikBeri 15y ago

I would frame the same idea in a different way: the scarcest currency is thought. Willpower is finite. There are a very small number of things you can spend effective mental energy on-you can't work at optimal intelligence 12 hours a day (or even 8 hours a day). Furthermore, I've noticed this trend where spending twice the amount of effective, focused work on X usually results in more than twice the benefits. This means that you have to pick what even enters your attention very carefully. So ask yourself: what do I spend most of my time thinking about? And what should I be spending my precious thought on?

ojbyrne 15y ago

Rather than Jim Collins, I'd vote for Michael Porter as the management guru to read. His idea of generic strategies is a great way to deal with this. Essentially he says there are 3 generic strategies - cost leadership, differentiation, and focus (market segmentation), and that you need to pick one and follow it 100%. Doing that really can focus the company on what needs to be done now and what is irrelevant to your success. http://en.wikipedia.org/wiki/Porter_generic_strategies http://en.wikipedia.org/wiki/Porter_generic_strategies

jmitcheson 15y ago

Out of all the CEOs I've been around, the one I viewed as the most successful would always tell me "If you try to do too many things at once, you end up doing justice to none of them at all".

robatsu 15y ago

The thing that I dislike the most about the technology business is people who want to use developers as crash test dummies for their random ideas and think that "good ideas" are the topmost measure of goodness and once having a good idea, all the rest will naturally unfold. Pivots are good and oftentimes necessary, but I learned years ago that good ideas are a dime a dozen. The ability of an organization to competently execute on a (seemingly) good idea is the much rarer skill, 1% inspiration/99% perspiration and all that. The OP seems to think this is something that can be managed. I do believe that, but I'm not sure it is something that can be as easily quantified & then learned as a generic management skill as the OP seems to imply.

devenson 15y ago

Correlation does not imply causation. A "startup" is a company in search of a successful business model. Those that fail will leave behind a record of many failed explorations, making it look as thought this was the "cause" of their failure. Perhaps they just failed to find their successful business model. Perhaps it was never there. That said, I do agree with the author. Focus is key.

wpietri 15y ago
There's an important difference, though. At my startup we've tried a lot of things, but we try them serially. We went through a bunch of ideas early on, doing our best to kill the idea in prototype. Here my co-founder talks about how we spent 6 weeks to kill an idea that other people spent 9 months (and millions of dollars) to kill: http://vimeo.com/24749599 http://vimeo.com/24749599 The failure mode that Suster talks about is trying to do all the ideas in parallel. I agree that startups should try a lot of things, but strongly believe they should focus on one at a time.

deleted 15y ago

[deleted]

jrkelly 15y ago

100% right on focus, but this part is grating: "But as you know, a few key people in any business have disproportionate impact on the company’s ultimate success. And nobody is more important in this regard than senior management." You see recommendations for this management style throughout Mark's blog posts. IMO, he is advocating a style that is more centralized than is effective in the uncertain environment of a startup. Strong central control works great when you are executing on a clear business model. Prior to that, you want empowered employees who have a shared view of the current business model hypothesis and are confident enough to question it.

xanados 15y ago
Keep in mind that his advice is targeted at companies at the stage in which he is most active, those seeking or having completed Series A/B venture capital financings. By the time a company has reached this stage it has much more centralized control than a pure pre-seed or angel startup.

fellars 15y ago

Any suggestions on how to maintain focus, while still allowing team members flexibility on what they work on? It seems to be a very fine line I have struggled with in the past.